August 9th, the Centers for Medicare and Medicaid Services (CMS) announced a proposed rule changing the Medicare Shared Savings Program, under which many of Medicare’s Accountable Care Organizations (ACOs) operate. Called “Pathway to Success,” the rule would change several aspects of the MSSP to encourage ACOs to assume more risk.

Currently, ACOs can apply for waivers from some federal requirements to experiment with innovative cost control measures and may operate for up to six years without taking on risk of losses. The ACOs receive a shared savings payment from CMS when they keep costs down, but they do not have to pay the difference when costs are higher than contracted payment amounts. CMS contends that this lack of risk of loss fails to hold ACOs accountable for poor performance and “may be encouraging market consolidation,” reducing choices for patients and ultimately increasing costs.

Explains CMS Administrator Seema Verma in a fact sheet about the changes,

“After six years of experience, the time has come to put real ‘accountability’ in Accountable Care Organizations. Medicare cannot afford to support programs with weak incentives that do not deliver value. ACOs can be an important component of a system that increases the quality of care while decreasing costs; however, most Medicare ACOs do not currently face any financial consequences when costs go up, and this has to change.”

The current MSSP rule offers a three Track program under which ACOs are encouraged to gradually assume more risk over six years to move to two-sided risk sharing. The new rules would limit ACOs to two tracks. The “basic” track would allow ACOs to begin under a one-sided model and follow a “glide path” to risk that includes five levels. The one-sided risk model would only be allowed for the ACO’s first two years. The “enhanced” track – based on Track 3 of the existing Shared Savings Program – would provide additional tools and flexibility to encourage ACOs that are able to accept higher levels of potential risk and reward to take on the highest risk from the start.

Other proposed changes include:

Modifying agreement periods from three years to five years;

Limiting more experienced ACOs to higher-risk participation options;

More rigorous screening for good standing among ACOs seeking to renew their participation in the program or re-enter the program after termination or expiration of their previous agreement;

Because it recognizes that ACOs may not be prepared to quickly transition to these new program requirements, CMS would allow ACOs with a participation agreement ending Dec. 31, to extend their current agreement period for an additional six-months and they could apply for a new agreement beginning on July 1, 2019. To correlate with this extension and renewal period, CMS does not intend to offer an application cycle for new agreement periods to being on January 1, 2019, and instead would accept applications for a one-time new agreement period start date of July 1, 2019. After this first mid-year start date, CMS would resume the usual annual application cycle for the year starting on January 1, 2020.

The rule has drawn criticism from the National Association of ACOs (NAACOS) which argues that the shortened time period for one-sided risk will cause ACOs to leave the program resulting in further consolidation and less competition to keep costs in check. The organization points to a survey of its members from May 2018, that found that 71% of the Track 1 ACOs surveyed would likely leave if forced to assume more risk.

In a statement, NAACOS President and CEO Clif Gaus criticized the proposed rules.

“It’s naïve to think that ACOs that aren’t ready can be forced to take on risk, given that the program is voluntary. The more likely outcome will be that many ACOs quit the program, divest their care coordination resources and return to payment models that emphasize volume over value. This would be a significant setback for Medicare payment reform efforts and would undermine implementation of the overwhelmingly bipartisan Medicare Access and CHIP Reauthorization Act (MACRA), which is designed to move providers into alternative payment models such as ACOs.

“The best scientific evidence shows that the Medicare Track 1 ACOs overall are returning millions of dollars of savings to Medicare and improving the quality of care for millions of beneficiaries. To shrink and disable this leading alternative payment model in its early stages defies logic.”

The formal public comment period on the proposed rule opens Friday August 17th upon its formal publication and will remain open for the required 60-day period until October 16, 2018. CMS states that it “encourages all interested members of the public, including ACOs, providers, suppliers, and Medicare beneficiaries to submit comments” for consideration. Comments may be submitted here, with commenters referring to code CMS-1701-P. The complete text of the proposed rule can be found here.